Extreme Rate Hikes Cause Alarm

Extreme Rate Hikes Cause Alarm

Efforts in Congress to tackle excessive and often miscalculated premium increases plaguing federal flood insurance got a boost in early January when NAR President-elect Chris Polychron joined a bipartisan group of senators at a press conference to urge passage of legislation that would give the federal government time to address the problem.

“This bill is going to come to the floor very, very soon,” said Sen. Chuck Schumer (D-N.Y.), a member of the Democratic leadership in the Senate.

The Federal Emergency Management Agency, which administers the flood insurance program, started hiking premiums on certain properties last fall with the goal of eventually bringing premiums up to their actuarial level. But the premiums on some properties have risen far more than Congress expected when it passed a law two years ago authorizing changes to make the program more fiscally sound.

What happened to Tim and Caterine Clearwater is a case in point. The couple last year bought a modest home in Haleiwa, Hawaii, without being told their annual flood insurance premium would jump from the $2,700 the seller was paying to $28,000. “There are many stories like this,” NAR Past President Moe Veissi said in testimony he gave before a House subcommittee in November.

The resulting turmoil prompted NAR late last year to issue a Call for Action in support of bipartisan House and Senate bills to require FEMA to stop implementing the changes so it can get a better handle on how the new actuarial rates are to be determined. The bills would also require FEMA to set up an advocate under the program so consumers have a place to turn to if they get stuck with confusing or astronomically high rate quotes.

FEMA would also be directed to start working with industry groups on a solution to the affordability problem.

At the end of 2013, more than 80,000 NAR members from across the country had sent letters to their members of Congress, sending the message that the problems affecting flood insurance are of national importance. “We need to push the pause button on this,” Veissi told lawmakers.

Spotlight onrising flood rates.Sen. Robert ­Menendez (D-N.J.), at podium, makes a forceful case Jan. 7 for the federal ­government to put the brakes on rising flood insurance premiums. NAR President-elect Chris Polychron, far left, shared the stage with a dozen senators from both parties to show NAR’s support for legislation that would give the government time to assess the impact of the increases.